How to Find and Buy a California Small Business

Written by admin on December 7th, 2010

Most potential business buyers don’t realize that 80% of all business buyers (those not utilizing the BizBen Network) are unsuccessful in buying a small California business. As the Director of the BizBen Network I talk and consult with potential business buyers on the phone daily, and hear, repeatedly, the frustrations and problems connected to searching for and buying a California small business. The concerns I hear are typically universal.

Buyers need to utilize both “Pull” and “Push” buyer search strategies and techniques to be successful. They need to pull the right information in, and push their information out to the right contacts and resources to find and buy the right California small business for sale. Small business buyers who don’t use these strategies (and the tips listed below) can expect that it will take anywhere from six months to two years to find and successfully buy a small business. Using the techniques/strategies below and utilizing the BizBen Network, will shorten the search and buying process to an average of three to eight months!

Top Tips & Strategies For Buyers Of California Small Businesses:

1. Know The General Types & Locations Of Small Businesses You Are Searching For

As a buyer you need to narrow down your search requirements–you need to know the business types and locations that meet your needs. As a former business broker I know that I would spend less time with potential business buyers who were unable or unwilling to narrow down their targeted search criteria or desired geographic locations. It’s fine to have several different types of businesses in mind–and you don’t have to be business specific–but there is a big difference between manufacturing oriented businesses and restaurants. Make sure to communicate those preferences to brokers, agents, and intermediaries.

2. Have A Buyer Profile & Personal Financial Statement Form Completed

All potential small business buyers should complete and have on file a Buyer Profile and Personal Financial Statement form. These completed documents should be faxed/emailed back with all Non-Disclosure/Confidentiality Agreements to business brokers, agents, intermediaries, and business owners. Providing these completed forms to sellers and brokers shows you are serious about buying a business, and saves them, and you, a lot of time and effort. These forms will also be requested from potential financing sources and landlords when negotiating the current or new lease on the business being purchased. Buyers signed up with, and participating in the BizBen Network get these forms as part of their initial consultation.

3. Get SBA Loan & Other Financing Pre-Qualified Before Starting The Search Process

Knowing whether your are pre-qualified or able to obtain financing to buy a small business will not only save you time but will educate you about what options you have with potential deal structures, so you’re prepared to negotiate effectively when dealing with brokers and sellers. There are approximately 16 different “data-points” financing companies and banks utilize to see if you are a viable candidate for business purchase financing. You need to know your options before you write an offer to buy a business. All buyers that join and utilize the BizBen Network get SBA loan/financing pre-qualified (all financing options are explored) as this is such an important part of the business buying process.

4. You Need To Get Your Info & Criteria “Pushed” Out

As a potential buyer of a small business, once you have the types and locations of businesses you are interested in, know if you are pre-qualified for financing (or what types of deal structures you should be negotiating on your behalf), you need to “push” your criteria and information out. Exposure is the key here. The more brokers, agents, intermediaries, and advisors that have, and are ready to act on your information, the more likely you will find and buy a business. You need to have your information being presented to all potential contacts at all times!

5. You Need To Reach “The Hidden Market” With “Push” Techniques

Sixty percent of all small businesses for sale are not “officially” on the market or advertised as being for sale. By “pushing” your information & requirements out to ALL intermediaries, potential seller/owners, and advisors, you will have access to many more great deals and “hidden” businesses for sale.

6. Respect The Confidentiality Of A Business Sale

Confidentiality when selling a small business is usually highly important to the owner of the small business and to the intermediary (business broker) who is representing the seller. Be prepared to sign a confidentiality or non-disclosure agreement and make sure you include back with this document your completed Buyer Profile and Personal Financial Statement (see step 2). Do not share information of a potential business acquisition target with anyone – save your sharing of information when working on your due-diligence with a CPA, consultant, or attorney. Those who don’t abide by the requirements for confidentiality, will be placed on the “do not deal with this buyer” list maintained by most intermediaries. There could also be legal ramifications depending on damage that results from the sharing of confidential information.

7. Search Daily, Be Diligent About The Search Process

Buyers need to search almost daily to find the right California business to buy. Over 200 new listings are added daily to BizBen.com and many of these listings get multiple offers right out of the gate when available to the market. Make sure you are signed up for Instant Daily Email Alerts & Daily Email Reports of new listings through a BizBen Power User Account (buyers in the BizBen Network get this set up for them during their consultation with a BizBen Counselor). Remember to do both: call and email potential sellers (see step 8 below)–make sure your message and your interest get through.

8. Don’t Ignore Older Business For Sale Advertised Listings

Just because it’s older doesn’t mean it’s a bad listing. Deals fall out and come back on the market, deal structures and prices change constantly. I counsel potential business buyers all the time to focus on older listings also (instead of just new listings on the market) since sellers of the older listings usually get more realistic, more motivated, and have “been around the block” a few times with a few buyers. Owner/Sellers tend to get more realistic about pricing and deal structures after a time on the market.

9. Call & Email (Both) When Inquiring About A Business For Sale

When finding a potential business to buy on sites like www.BizBen.com make sure you both phone (leave a voicemail if no one answers) and email the seller, broker, or agent! Many buyers just phone or just email. DO BOTH! And if you don’t get a return call or email within 6 hours, do both again. Show that you’re interested. With better listings for sale there is usually a demand for information from many potential buyers. Remember you are in competition with other buyers – show your strong interest by both calling and emailing the seller or broker.

10. Get Your Team Of Advisors In Place & Ready For Action

Select your team of advisors (contact the BizBen Network for an advisor or resource in your area) .CPA/accountant for due diligence, attorney for assistance with contracts, SBA and non-SBA loan financing sources, etc. Be ready with these professionals now so you don’t kill time looking for them while the seller selects another buyer, believing that you weren’t ready to proceed to buy his or her business!

Being successful in buying a California small business takes time and diligence, but if potential buyers utilize the tactics listed above their success will be assured.